Sixth Circuit Decision Muddies the Waters on Constitutionality of TCPA’s Government-Debt Exception

Business Litigation Update

Date: September 15, 2021

Introduction

On September 9, 2021, in Lindenbaum v. Realgy, LLC, the United States Court of Appeals for the Sixth Circuit held that despite the Supreme Court’s 2020 decision in Barr v. American Association of Political Consultants (“Barr”), the Telephone Consumer Protection Act (TCPA) could be enforced against a non-government debt collector for calls made prior to July 6, 2020. While some district courts (including the district court whose decision was being reviewed in Lindenbaum) have held that the TCPA was unconstitutional in its entirety for calls made prior to July 6, 2020, the Sixth Circuit is the first federal circuit court of appeals to reach the issue. Given the conflicting opinions, the constitutionality of the TCPA as applied to calls made between November 2015 and July 6, 2020 will continue to be litigated.

Background

Originally enacted in 1991, the TCPA prohibits autodialed or prerecorded calls to cellphones without consent except in limited circumstances. Historically, courts viewed the prohibition as a constitutionally authorized “time, place and manner” restriction.

In November 2015, Congress added an exception to the TCPA that allowed those who collected debts owed to the U.S. government to make such calls (“government-debt exception”). On July 6, 2020, in Barr, seven justices of the U.S. Supreme Court held that exempting calls for the collection of government-debt caused the TCPA to violate the First Amendment because it regulated speech based on content (permitting speech to collect governmental debts while prohibiting the same speech by others). Those justices also found that the government-debt exception could be severed from the TCPA, leaving the general prohibition of the statute intact and in effect. A footnote in a plurality opinion joined by three of the justices suggested that the TCPA could still be enforced against non-government debt collectors, while those relying on the government-debt exception may have a due process-based defense.

Following Barr, some district courts held that the severance of the 2015 amendment only took place as of the date of the Supreme Court’s decision in 2020, with the result that the entire TCPA was unconstitutional prior to that decision. Others, following the footnote in the plurality opinion, disagreed and held that as to non-government debt collectors, the TCPA was always enforceable.

Lindenbaum was a putative class action brought against a non-government debt collector in the Northern District of Ohio based on calls that occurred between November 2, 2015 (when the government-debt exception was enacted) and July 6, 2020 (when the Supreme Court decided Barr). Post Barr, the defendant filed a motion to dismiss based on lack of subject matter jurisdiction, arguing that the severance of the government debt exception is a remedy that operates only prospectively, and that prior to severance, the TCPA was unconstitutional and thus courts had no jurisdiction to enforce it. The district court agreed and granted the motion to dismiss. The plaintiff appealed to the Sixth Circuit and the United States intervened in support of the statute. There were several amicus briefs, including one filed by the American Civil Liberties Union.


Sixth Circuit Decision

The Sixth Circuit held that the district court erred in concluding that severance of the government-debt exception itself was a “remedy.” Rather, the Sixth Circuit held that as an unconstitutional statute, the government-debt exception was void from the beginning and thus never considered to be law.

The Sixth Circuit noted that while statutes operate only prospectively, judicial decisions normally operate retrospectively. “[C]ourts do not rewrite, amend, or strike down statutes,” and instead say what the law is.

The defendant argued that the First Amendment required an exception to the general rule that judicial decisions apply retroactively. The defendant asserted that because the TCPA could not be enforced against government debt collectors prior to severance, allowing the TCPA to be enforced against non-government debt collectors prior to severance would create an identical discriminatory system that the Supreme Court held as unconstitutional in Barr.

The Sixth Circuit rejected that argument, reasoning that while a government debt collector might have a due process defense for calls made prior to Barr (on the theory that a government debt collector would not have notice that its conduct was unlawful), that defense was not at issue in this case because the defendant was not collecting government debt. The court also reasoned that the existence of that potential defense for government debt collectors did not amount to a content-based restriction on the speech of non-government debt collectors. The Sixth Circuit reversed and remanded the case to the district court.

Conclusion

Courts in other jurisdictions remain divided on the impact of Barr to calls made between November 2, 2015 and July 6, 2020. Until the Supreme Court issues a decision on the retroactive application of the severance in Barr, companies that make calls subject to the TCPA should be cautious and ensure their compliance with the TCPA.

FOR MORE INFORMATION

For more information, please contact:

Scott A. King
937.443.6560
Scott.King@ThompsonHine.com

Jessica E. Salisbury-Copper
937.443.6854
Jessica.Salisbury-Copper@ThompsonHine.com

Zion Savory*
937.443.6921
Zion.Savory@ThompsonHine.com

*Not licensed to practice law.

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